Cypress Semiconductor [NASDAQ: CY] is one of the most bullish stocks at the moment. This follows an announcement by German Company Infineon, that it will be buying CY at $10.1 billion. This is a premium on the company, and values it at $23.85 per share. The bullish sentiment also comes from the fact that the deal is likely to be closed either in late 2019 or in 2020. Up to that point, CY investors will continue to earn dividends. This makes it a potential profitable hold for investors, since even without the buyout news, CY is a profitable company that has some solid fundamentals backing it up.
One of these fundamentals is its growing revenues. From a look at its fundamentals, the company’s revenues have been getting stronger with each passing year. The company has a quarterly revenue growth (yoy) of 117.20%. This is a strong indicator that its product offering in the market has continued to get better over time. Besides the growing revenues, the company is also making good margins on its product offering. The company’s profit margins stand at 14.97%. It’s a good indicator that its products are competitive enough for it to charge a premium.
The books also paint the picture of a company with strong management. Two indicators to this fact are the return on assets, and the return on equity. The company is performing quite well on both fronts. It has a return on assets of 4.36% and a return on equity of 18.51%. Essentially this means that CY’s management is very efficient in its utilization of the company’s net assets. This is a key factor that indicates the future of this stock, with or without the possible buyout by Infineon.
CY is also in a strong cash position in terms of money for operations. It has an operating cash flow of 501.27 million, which means it can comfortably handle all its operational expenses with ease.
These fundamentals, and the buyout news have added to the bullish sentiment around this stock. It explains the hugely bullish price action on the monthly charts. On this chart, CY has been bullish ever since it broke past the 50-day MA at $16.36. However, it has been range bound since yesterday, an indicator that investors could possibly be consolidating their positions based on the buyout news.
How it trades in Tuesday trading will depend largely on the markets open. The markets have been in uncertain territory, and news of antitrust investigations into FAANGs may weigh down on the NASDAQ when the markets open. However, from a pure technicals perspective, CY looks pretty bullish at this point.
In closing, remember that ballpark premium on the potential buyout of CY only values it at $23.85 per share so the upside potential may not be that great after all from its current trading price.